Oil market to face deficit in 2023, says Oxford Institute

Oil&Gas Materials 20 May 2022 12:39 (UTC +04:00)
Laman Zeynalova
Laman Zeynalova
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BAKU, Azerbaijan, May 20. Oil market is expected to face a deficit in 2023, Trend reports with reference to Oxford Institute of Energy Studies (OIES).

“We project a small 0.4 mb/d surplus in 2022 and a -0.3 mb/d deficit in 2023. With the market failing to build a material surplus in 2022, severe pressure is maintained to the exceptionally thin oil stocks. Despite the increased downward demand pressures, the supply/demand risks to the outlook continue to favor a more tightening supply picture in both 2022 and 2023. This is reflected in the global balance risks, with the supply/demand gap ranging between -0.1 mb/d and 0.7 mb/d in 2022 and -1.9 and 0.8 mb/d in 2023. The SPR releases target both crude and products relief, but their impact is only temporary and confined to the near-term,” OIES said in its latest report.

OIES experts note that product markets continue to tighten, with the refining margins at record levels reflecting bottlenecks in the refining sector. EU refineries are ramping up production, but they are facing significant constraints in terms of crude and feedstock availability and high refining costs, while filling the supply gap proves extremely difficult.

The report reveals that product stocks continue to fall to critically low levels exacerbated by Russian refineries cutting runs. Securing supplies from Asia is becoming increasingly challenging, as Asian distillate markets are also tightening on rising demand as economies reopen and stricter limits on China product exports. Pressure has spread to jet fuel as flights restart.

“Our Reference forecast for Brent is downgraded by $5.1/b to $105.4/b in 2022 but lifted by $4.5/b to $99.2/b in 2023. While current crude prices are caught between opposing supply/demand forces, the balance of risks remains skewed on the upside in 2022 at $10.4/b before easing to $2.8/b in 2023.Depending on the size of disruption in Russian supplies and subsequent upply/demand responses, Brent ranges between $101.8/b and $119.3/b in 2022 and $85/b and $116.1/b in 2023, reflective of the severe oil uncertainty that dictates most of our outlook. Oil markets are now more than ever subject to policy decisions and their effectiveness, keeping price volatile and exacerbated by reduced liquidity,” says the Oxford Institute.


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